-In the Above Figure, If the Economy Is Initially at Point

question 231

Multiple Choice

-In the above figure, if the economy is initially at point B and taxes are raised while potential GDP does not change, then the economy will

• A) move to point C.
• B) move to point A.
• C) move to point D.
• D) stay at point B.

---

Definitions:

Surplus

An excess amount of something, often referring to goods, services, or resources that exceed what is needed or used.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to a situation where there is no tendency for the price to change unless external factors intervene.

Government Imposes

Measures or regulations put in place by the government that can impact various aspects of economic and social life.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a specific price over a given period of time.